Why MGM Resorts Stock Cratered 14.8% Today

Core Viewpoint - MGM Resorts reported better-than-expected second-quarter 2024 financial results, but shares dropped significantly due to concerns about future performance and specific comments regarding upcoming events [1][2]. Financial Performance - Quarterly revenue increased from $3.94 billion to $4.33 billion year-over-year, while net income decreased from $200.8 million to $187.1 million due to higher labor costs [2]. - Earnings per share rose by $0.05 to $0.60, driven by share buybacks, with reported adjusted earnings per share at $0.86, surpassing analyst expectations of $0.59 [2]. Investor Concerns - Investors are worried about the anticipated weaker performance of the 2024 Formula 1 race compared to the inaugural race in 2023, with management indicating that room rates would not exceed $1,000 per night as they did last year [2]. - There are concerns regarding the performance of BetMGM and the potential need for additional capital in online gambling operations, both for BetMGM and MGM's international online gambling ventures [2]. Company Outlook - MGM Resorts is recognized as a strong cash generator within the gambling industry, with stable operations over the past year, but growth appears limited and uncertainty about future performance exists [3]. - Management has executed significant share buybacks, acquiring 40% of the company's outstanding shares, including $400 million in the second quarter, and anticipates double-digit cash flow growth in the coming years, positioning the company as a value stock [3].